Ontario Budget Delivers Infrastructure Investment; Silent on Tools to Manage Costs

TORONTO, May 2, 2013 /CNW/ - The Association of Municipalities of Ontario (AMO) welcomes the Ontario Budget's proposed investments in infrastructure, such as roads, bridges and public transit. The Province is in a better position to invest in communities because it has controlled costs, including growth in wages and benefits. Municipalities need better tools to do the same.

"All governments - Federal, Provincial and Municipal - need to work together to make infrastructure investments that promote safety and economic prosperity," said AMO President Russ Powers. "The municipal property tax base cannot support the level of investment that's needed and the demand exists right across Ontario. The Budget is on the right track by investing in urban, rural and northern communities."

Specifically, the Budget would expand support for transportation and transit infrastructure in the Greater Toronto and Hamilton Area, invest $100 million in 2013-14 for roads and bridges in northern and rural areas and make the existing Provincial gas tax transfer permanent. Currently, two cents in gas tax revenue is transferred to municipalities for every litre that's sold.

The Budget emphasizes the Ontario's government's success in controlling costs, particularly with respect to wages and benefits; and notes that it has been more successful than municipal governments. For some time, municipalities have been calling on the Province to provide the tools that they need to achieve similar results. Changes to Ontario's interest arbitration system are the most obvious and pressing.

"The Ontario Government says it is confident that broader public sector partners can work together to control wage and benefit costs while protecting services. Municipalities are not. Current economic conditions have not prevented interest arbitrators from awarding extremely high wage and benefit increases for emergency service employees. These increases will continue without changes to Provincial legislation - and four attempts to balance the system have failed in the past 12 months."

More detailed Budget analysis will be provided by AMO through its free Breaking News Alerts and weekly Watch File. See www.amo.on.ca.

Ontario Budget Analysis

2008 Upload Agreement
The 2013 Ontario Budget would honour the 2008 Provincial Municipal Fiscal and Service Delivery Review agreement to upload Provincial social service and court security costs from the municipal property tax base.

Infrastructure
The 2013 Ontario Budget's commitment to infrastructure investment will make Ontario communities safer, more competitive and more prosperous.

Ontario's joint 2008 Provincial Municipal Fiscal and Service Delivery Review (PMFSDR) showed that Ontario would need $6 billion in news infrastructure investment every year for 10 years to address our province's infrastructure deficit.

As part of its response to this demand, the Ontario Government agreed to upload Provincial social service and court security costs from the municipal property tax base over a 10 year period. The Ontario Government has consistently honoured this agreement and the commitment has allowed municipalities to focus on core municipal programs and services, and to better address their infrastructure demands.

Ontario municipalities own more infrastructure than any other order of Government - Federal, Provincial or Municipal - yet the municipal tax base limited. Ontario municipalities receive about 9 cents of every tax dollars. This is not sufficient to meet their infrastructure needs. All three orders of government need to work together to meet Ontario's infrastructure demands.

The 2013 Budget would:

• Invest $100 million in 2013-14 for roads and bridges in northern and rural areas,
• Make the existing provincial 2 per cent per litre gas tax transfer permanent.
• Create select High-Occupancy vehicle (HOV) lanes in the Greater Toronto and Hamilton Area into  High-Occupancy toll (HOV/HOT) lanes, where carpoolers continue to drive for free but other drivers could choose to drive in the HOV lanes for a toll
• Expand support for transportation and transit infrastructure in the Greater Toronto and Hamilton Area - details to follow.

Social Service Costs
The Budget makes a number of social service related commitments. These changes have the potential to increase costs for municipal governments although we do not have an estimate of the municipal impact yet. Currently, the Ontario government is taking on increasing responsibility for funding its own social service programs, without having to rely on Ontario's property tax base. This is the primary objective of the 2008 PMFSDR Review and recent history has shown that Ontario municipalities were wise to ensure that income redistribute programs are funded through the more dynamic income tax base. Property taxes should only fund programs and services related to property. AMO expects to be fully consulted by the Ontario Government as these social service changes are developed.

Rising Emergency Service Costs
Ontario municipalities are deeply concerned about the unchecked rise in emergency service costs. Wages and benefit increases in this area are greater than increases for other municipal employees, the rate of inflation, increases for Ontario's population, and the capacity of many municipal governments. For example, the OPP's collective agreement will amount to a minimum wage increase of at least 8.5 per cent for 2014, and recent decisions by interest arbitrators have awarded fire fighters contracts of up to 24 per cent over three years. Ontario municipalities will continue to battered by these increasing costs without legislative changes to Ontario's interest arbitration system. AMO has made clear and balanced recommendations to address these costs. However, four legislative attempts to address the problem have failed in the past 12 months.

Ontario Municipal Partnership Fund
The budget reaffirms a decrease to the Ontario Municipal Partnership Fund (OMPF) by $25 million in 2014.  AMO remains extremely concerned with this decrease.  It is occurring at the same time as the government is consulting separately on the OPP costing formula and key property assessment issues during an OMPF transitional year.  The potential for unintended consequences is great.  In addition, the budget contains changes to the social assistance system which will have municipal cost implications starting in 2014.  In 2014, municipalities remain responsible for funding 14.2% of OW benefit costs.  At the same time, the government has announced the end of OMPF reconciliation as of 2010.  This increased municipal exposure to increased social assistance costs and offers no corresponding offset thought the OMPF.  Historically this had always been the case.

AMO again urges the government to reconsider the order of these reviews and in the meantime, restore $25 million to the OMPF envelope in 2014.  These changes are occurring while the 2013 OMPF is in transition.  Allocations have not been calculated using up-to-date figures and adds to the challenges 2014 pose for municipalities.

Source Water Protection
The budget included is $13.5 million over three years for drinking water source protection.  This will assist small and rural communities.  Additional details are pending.

AMO is a non-profit organization representing almost all of Ontario's 444 municipal governments.  AMO supports and enhances strong and effective municipal government in Ontario and promotes the value of municipal government as a vital and essential component of Ontario and Canada's political system.

SOURCE: Association of Municipalities of Ontario

Brian Lambie, AMO Media Contact, 416-729-5425, [email protected]
Follow AMO on Twitter: @AMOPolicy